Peter Power (Limerick East, Fianna Fail)

In general, I welcome the Bill. I am happy the issue of below cost selling is being dealt with in the context of competition legislation, which is the proper context. Below cost selling, which was outlawed by the groceries order for many years, beginning in 1956, is not of itself wrong and should not be made illegal, which happened under the 1956 and 1986 orders. However, below cost selling with the specific intention of using one's relative economic strength to drive a competitor out of business in a sustained and targeted way is wrong and anti-competitive. It should be made illegal, but this should be done in the context of competition legislation, not in terms of price fixing legislation or regulations.

Price fixing regulation is not the appropriate method in this regard. It is an anachronism in 2006, and more reminiscent of the type of Government controls which operated in the eastern European economies after the Second World War, when people bought their food with coupons and vouchers at fixed prices, regulated by their governments. Ireland has an open, dynamic and modern economy and that sort of price fixing through Government regulation, for whatever noble reason, is an old-fashioned way of trying to influence the market.

Before discussing the detailed provisions of the Bill, I welcome the process which has brought us to this stage. It was correct for the Minister to set up an intensive public consultation process, bring all the players into the decision-making process and let all have an opportunity to make their case. The submissions made to the Department were detailed, complex and well researched, and the process provided the proper basis on which to bring this type of legislation forward. For that reason, I very much support it.

Given that we have decided the groceries order and price fixing regulations or legislation are not appropriate, we must decide whether competition legislation, existing and proposed, is the appropriate way of dealing with this matter. Whether competition legislation is sufficient and robust enough to deal with the acknowledged fears of the small retailers is what today's debate should be about. We must ask several key questions. What is the nature of the competition? Who is competing against whom? In what market are they competing? There are simplistic notions that once price fixing and below cost selling regulations are eliminated, the multiples will immediately begin a massive price slashing spree in an attempt to take out every small retailer and corner shop in the country. That is an utterly simplistic way to look at the complex market which constitutes retailing in 2006.

We must consider the question of who is competing against whom. It is certain that the multiples compete against each other. Tesco, Dunnes Stores, Aldi, Lidl and Spar are in a massive competitive market all of their own, leaving aside any small shop retailer or member of RGDATA. To introduce the possibility of below cost selling in that market would be a fabulous proposition because the consumer will be the ultimate winner and none of the players in that market will be driven out of business. There is also massive competition in the small retail market. Small retailers and corner shops compete against one another, which is right and proper.

There is competition at national and local level but we must remember that price competition is not the only type of competition, as has been suggested. Many other forms of competition exist, such as location competition. Given that Brown Thomas has a state-of-the-art shop on Grafton Street offering non-competitive prices, there would be no point in a competitor setting up in Navan, with all due respect to Navan, offering the same product at half the price. Nobody would buy its products and it would go out of business. There is also competition in the way service is provided, in regard to the diversity of the products provided and, importantly, there is serious competition with regard to the convenience of the consumer, leaving aside the aspect of price.

Many retailers express the fear, which I acknowledge, that the Bill will result in a sustained period of anti-competitive pricing by the national multiples against small retailers throughout the country. I am not convinced by this argument. While researching this matter, I was much taken by the 1999 report of the Competition and Mergers Review Group. Having carried out an exhaustive analysis of the market, the report stated the group concluded it was extremely unlikely that a firm with a market share of the larger Irish grocery multiples could mount a successful campaign of predation, at least on a national level. The fears of small local shops are unfounded in respect of a price war by the national multiples. However, if such a war was resulted, we would have to consider it.

We must take account of the well-founded advice of the Competition and Mergers Review Group. Having said that, it expresses no concern at national level. My concern and my main focus is anti-competitive practices at local level. My constituency contains a good example of these practices. A huge multiple outlet, Dunnes Stores, competes with a corner shop just 10 yards from it. In that microcosm of the market, there is no doubt that Dunnes Stores is in a dominant position, notwithstanding its share of the national market. In a sustained way, I have no doubt that it has the financial muscle to take out its competitor. Across every range of product, it could slash its prices, put the competitor out of business and then raise its prices. We must ensure competition legislation guards against such practices, but I am not convinced it does. This is the question we must address and be satisfied with before we complete this legislation.

There are two ways of approaching the issue. The aggrieved party — the small corner shop — could take its case to court. However, we all acknowledge that difficulties arise with regard to compiling economic evidence, notwithstanding the cost and the possibility the shop is fighting a price war. I acknowledge it is difficult for local shops to fight multiples in a legal way. The best way to approach this issue is to give vastly increased powers of policing, protection and enforcement to the Competition Authority. While I acknowledge some resources have been made available to the authority, I strongly suggest these are not enough. The Minister should consider giving the authority vastly increased powers to ensure it polices this area.

The Minister and his Department have a major role in this regard. They should police the Competition Authority and question it as to what is has done to police various areas, whether it has compared prices, how many complaints have been made, what it has done to follow up those complaints and whether the authority has compiled evidence to bring a case to court. One of the best ways to avoid competition like that which occurred between the multiple and the small corner shop 100 yards up the road from my home, which could occur in towns in my area like Nenagh, Abbeyfeale and Newcastle West, is to ensure that if multiples slash prices across a range of products, they do so in all their stores. This makes it much less economically viable for a multiple to engage in sustained predatory pricing to the detriment of small outlets. Such a change would also benefit the consumer. I ask the Minister to examine this proposition closely. If multiples engage in below-cost selling, which will now be legal, they should be forced to apply it in all their stores to prevent them from taking out small retailers in the manner I have previously described. However, in general, I welcome the fact that the Government proposes to introduce competition legislation which deals with price fixing rather than mere price-fixing regulations. I commend the Bill to the House.

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